Boxship orders on record rally

Boxship orders on record rally

LONDON - Orders for new containerships this year have already topped 1 million TEUs, more than doubling the contracts signed for all of 2002 and on track to surpass contracts for 2000, the previous record year, as shipping lines scramble for tonnage to keep pace with the explosive growth in demand for cargo transport on the major trade routes.

The order frenzy reached a new peak in July when 67 ships with a combined capacity of nearly 350,000 TEUs were booked, according to leading London shipbroker H. Clarkson. This took orders for the first seven months of the year to 240 ships of 1.056 million TEUs compared with 426,900 TEUs in 2002 and 982,200 TEUs in 2000.

The value of the orders in the first seven months of the year has reached $11.6 billion compared with $12.4 billion for all of 2000.

The surge in contracts, coupled with a flood of ever larger vessels set to come on the market in 2003 and 2004, is having a negligible impact on the containership charters as cargo demand on key liner routes creates a shortage of available tonnage and drives up hire rates.

Container capacity will grow by 577,000 TEUs, or 7 percent, in 2003 and by 621,000 TEUs, or 6.5 percent, in 2004, trailing the 9.6 percent and 8.1 percent growth in demand over the next two years, Clarkson predicts.

Charter rates for vessels of between 3,500 and 5,000 TEUs have stalled in recent weeks as liner shipping companies negotiate discounts of up to 35 percent on the spot market in exchange for committing to longer fixture periods.

Top carriers also are chartering post-panamax tonnage that is yet to be built, securing daily discounts of up to $6,000-7,000 from current spot rates. In recent weeks, Maersk Sealand booked nine vessels of 5,000 TEUs capacity each that will be delivered in 2005, and CP Ships signed long term charters for nine 4,250 TEUs ships for delivery between 2005 and 2007.

The spot market for medium-sized tonnage of between 1,500 TEUs and 2,000 TEUs is still rising with the daily rate for a 1,700 TEUs ship reaching an all-time high of $15,500 compared with $13,950 in June and an average of $8,025 in 2002.